Union funding cuts force Miliband to turn to millionaires

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Alf Crossman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

After numerous dispatch box jibes at David Cameron about the Conservatives being bank-rolled by rich individuals, it appears that Ed Miliband is now having to do the same. Last week it was David Owen pledging £7,500 to Labour; this week it’s Tony Blair’s turn to get them out of a deep, self-dug financial hole.

The actual amount of Blair’s donation is unknown, but it’s rumoured to be substantial. It will need to be; as things stand, Labour is in danger of going into an election campaign without a brass farthing to its name. In the 2010 election, Labour spent a very modest £8m on a cut price campaign, a drop of almost £10m on 2005. In contrast, the Conservatives spent £16.7m.

Miliband may have been brave to sever the financial ties with the unions, but his timing couldn’t have been worse. Whoever advises him deserves to be sacked. Distancing Labour from the unions probably seemed like a good idea at the time, and it will certainly make the party more electable by pandering to the centre-right. But it will come at a hefty price.

Although the new arrangements for individual affiliation to the Labour Party will not come in until after the next election, Unite has already struck back, announcing that the number of its members affiliating directly to the labour Party has halved to about 500,000 – meaning the amount of funding to Labour would fall by £1.5m. Unite boss Len McCluskey has said the new rules will give the unions more power over their political funds. Well, here’s the proof. Just visualise the scene, Miliband playing a modern day Oliver Twist saying to Beadle McCluskey, “Please sir, can I have some more?”

Having criticised the Tories for accepting substantial personal donations, the problem for Miliband is how to manage the about-face. In July last year he tweeted, “I’m proud that Labour have links with ordinary working people. David Cameron is bankrolled by a few millionaires”. That sounds a bit hollow now.

Recent individual donations to Labour include £1,647,500 in tax efficient shares from businessman John Mills, brother-in-law of Tessa Jowell and chairman of retailer JML. Mills is the son of an army colonel and received a public school education. He has a pilot’s licence and flies himself to business meetings. If Mills is typical of the ordinary working people that Miliband is proud of his links with, then I’m a Dutchman.

Labour also received £661,440 from property developer Andrew Rosenfeld, and £76,300 from Tony Blair, two more ordinary working people. If you add the £322,000 from Saatchi and Saatchi (is that really a company donation?) Labour and the Tories start to look very similar. In September last year, Miliband was threatening to cap donations to all political parties at £5,000 as part of its election manifesto. That looks a bit rich now, if not downright hypocritical.

Embarrassment of riches

Labour has been supported by individual donors in the past. In the 1960s Joseph Kagan, of Gannex raincoat fame, provided funding for then prime minister Harold Wilson’s private office. Wilson gave Kagan a knighthood in his 1970 resignation honours list. When Wilson resigned again, in 1976, Kagan was made a life peer. Four years later Kagan became an embarrassment to Labour. He was arrested in Paris for tax evasion, charged with theft and convicted on four counts. He was fined £375,000 and served a ten month prison sentence. Somewhat ironic given the recent focus in parliament on tax avoidance and tax evasion.

Blair’s decision to bail out Labour could be seen as him salving his own conscience. He’s said on more than one occasion that it was a brave move by Miliband to create more distance between Labour and the unions, and something Blair should have done himself. But we all know that Blair was too much of a strategist to put the party in a financially vulnerable position.

Currently the Labour Party has debts of around £12m. In the third quarter of 2013 they paid off a measly £385,000. Without substantial funding from the unions or elsewhere, there is no way they can mount a decent election campaign. This is another example of an ill-thought-out headline-grabbing policy with a total disregard for strategic thinking.

The Miliband sycophants can applaud all they like and talk about brave decisions, watersheds and defining moments, but the harsh reality is that Labour is stony broke. Liam Byrne’s 2010 note to the incoming chief secretary to the Treasury, David Laws, saying, “Dear Chief Secretary, I’m afraid to tell you there’s no money left,” might have seemed amusing at the time. Now it must really grate as the party struggles to stay afloat.